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Correction Forecast for Pound to Australian Dollar and GBP NZD Exchange Rates Today

August 11, 2015 - Written by Toni Johnson

Chinese Slowdown Concerns Weigh on AUD NZD CAD Exchange Rate Trading

News of the situation in the financial markets of Asia’s premier economy has been difficult to avoid during recent weeks - China’s stock market has been getting hammered. The selling pressure in the nation’s equities market has seen Chinese shares lose over 30% of their value in the 4 weeks following 12th June.

Pound Sterling (GBP) Gains on Australian Dollar, New Zealand Dollar, Could Return to Multi-Year Best Conversion Rates

Although stock markets are not a barometer for the health of the economy to which they are attached, and they are by no means an accurate gauge of the fundamentals at play, there is some linkage. From this point of view, it’s worth noting that China is the number one export destination for both Australia and New Zealand. Perhaps unsurprisingly then, the recent correction in Chinese stocks has coincided with a spike for the Pound Sterling (currency : GBP) against both the Australian Dollar (currency : AUD) and the New Zealand Dollar (currency : NZD). Sterling has struck new multi-year highs against both Antipodean tenders, with the GBP AUD exchange rate peaking at 2.1529 last month - its highest level since March 2009. The GBP NZD exchange rate, meanwhile, topped out at 2.4031 earlier this month – you would have to go back as far as September 2009 since the pair had changed hands at as high a level.

Currency Market Forecast: GBP/AUD, GBP/NZD Exchange Rate Volatility Predicted

The Chinese authorities have been pumping funds into equities to try and prop up domestic share markets since mid-July and this policy now appears to be working – the Shanghai Composite Index gained around 5% during the Asian trading session on Monday. Other things being equal, this should send GBP AUD and GBP NZD lower – fear is a great driver in the global currency markets, so analysts advise investors buying the Aussie and Kiwi to consider exiting the market sooner rather than later. However, an interest rate hike from the US Federal Reserve, which some economists believe could take place as soon as next month, would be likely to send GBP AUD and GBP NZD through to fresh multi-year highs.
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TAGS: Pound Australian Dollar Forecasts Pound New Zealand Dollar| Forecasts

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